When some expenses are incurred and paid by the firm in the process of realisation of assets and payment of liabilities, __ A/c is debited and _ A/c is credited.

Partner's Capital, Realisation

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Realisation, Bank

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Bank, Realisation

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Realisation, Partner's Capital

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Solution

The correct option is A Realisation, Bank
The Realisation account is prepared to record the transactions relating to sale and realisation of assets and settlement of creditors. Any profit or loss arising out of this process is shared by partners' in their profit sharing ratio. Partners' accounts are also settled and the cash or bank account is closed. Realisation A/c is debited while Bank A/c is credited, when some expenses are incurred and paid by the firm in the process of realisation of assets and payment of liabilities.

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Q. ________ A/c is debited when realisation expenses are paid by a partner on behalf of the firm.

A and B, who were sharing profits and losses in the ratio of 60% and 40% respectively, decided to dissolve the firm on 31st March, 2015 on which date some of the balances were as follows :

$\begin{matrix} Amount (Rs.) A's Capital & 2, 40, 000 B's Capital (Debit Balance) & 25, 000 Profit & Loss A/c (Debit Balance) & 30, 000 Trade Creditors & 40, 000 Loan from Mrs. A & 20, 000 Cash at Bank & 15, 000 \end{matrix}$

The assets (other than cash at bank) realised Rs 1,90,000 and all liabilities were paid off less 5% discount. Realisation expenses amounted to Rs 4,000.

Prpare Realisation Account. Capital Accounts and Bank Account assuming that both the partners are solvent.

Q. Select the most appropriate alternative from those given below :

In case of dissolution assets and liabilities are transferred to _____________A/c.
a) Bank A/c
b) Partner’s capital A/c
c) Realisation A/c
d) Partner’s current A/c

The expenses of Realisation are _______________ Realisation A/c.

Give the necessary journal entries in each of the following alternative cases :

(i) Realisation expenses amounted to Rs. 500.

(ii) Realisation expenses paid by the firm amounted to Rs. 500 and the partner has to bear the realisation expenses.

(iii) 'A' one of the partners was to bear all the realisation expenses for which he was given a commission of 2% of net cash realised from dissolution. Cash realised from assets was Rs 25,000 and cash paid for liabilities amounted to Rs 5,000

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When some expenses are incurred and paid by the firm in the process of realisation of assets and payment of liabilities, __________ A/c is debited and _________ A/c is credited.

When some expenses are incurred and paid by the firm in the process of realisation of assets and payment of liabilities, __ A/c is debited and _ A/c is credited.